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A Guide to Crowd Funding

Tools

Dozens, perhaps hundreds, of crowd funding websites help people drum up financial support for everything from creative projects and social causes to medical bills and disaster relief. Based on volume of web traffic, Kickstarter and Indiegogo are the top two, followed by GoFundMe, according to the Internet ranking site Alexa. All are online payment portals that collect funds through a third-party service. The sites charge a fee, and typically so do the payment services. Combined, the fees can run around 10 percent of the total raised and sometimes more.

Crowd funding sites follow two basic models -- all or nothing or keep whatever you get. With all or nothing sites, supporters make a payment pledge, but aren't billed unless the project reaches or passes its dollar goal within an allotted time. With others, all money donated (minus the fees) goes to the project creator, whether a goal is met or not.

Earlier this year, Time Magazine listed four crowd funding sites as among the best for collecting money from friends, fans, relatives and strangers. They are Kickstarter (specializing in creative projects), Gambitious (specializing in games), and Rock the Post (specializing in viable business ideas), and Indegogo (founded with a focus on film, but now wide-ranging).

The field has seen some legal scuffles, among them a patent suit by Kickstarter, which claimed a company called ArtistShare had tried for an overly broad patent. ArtistShare, one of the early pioneers in crowd funding, began in the early 2000s, essentially helping jazz musicians pre-sell records to fans; it's now beta testing an expansion into a wider market.

Kickstarter

Founded: 2009

Size: 77,917 total projects to date, 32,644 of them successful, raising $358 million.